Making a Success of Property Investment
Finding the right property to invest in can be the difference between a successful investment and a major financial mistake. Choosing the correct property to invest in will not only pay you a monthly income but also grow in value. However, if you purchase the wrong property it could end up costing you money each month, lying empty and build up a lot of stress.
Taking the time to find the right property is an essential part of investing in the buy-to-let property market. The more planning and attention that you put in at the beginning, the more successful your buy-to-let experience is going to be.
Landlord associations that organise meet-ups and professional property networking events and can be great places to meet other investors and benefit from each other’s experiences.
There’s a lot to consider when getting started with buy-to-let, so below are just a few of the fundamentals you should consider:
Consider your aims
Start with WHY you are looking to invest money into property. Are you looking for long-term income or short-term gains in capital for example. Also consider what your risk profile is, are you risk-averse or happy to take risks for potential higher gains?
Look at the return on investment
The ‘best’ and most expensive homes do not always make the best buy-to-lets. Many landlords benefit from apartments and houses that are relatively cheap to buy, mortgage and command comparatively good rents. These buy-to-let properties certainly exist but they can take a while to find.
You also have to remember that properties offering a great-looking return may risk void periods too. If your buy-to-let property is empty and you’re having to service the mortgage with no rent coming in, it can be a painful experience and eat into your property's return on investment.
A lot of landlords choose to invest in a buy-to-let property close to where they live and this can work; it means they are close-by help if there is a problem and if they have experience they can even manage their own property, although we strongly advise enlisting the help of a reputable letting agency.
It is better to look at where you can purchase buy-to-let property that meets your own investment aims. Looking across the UK, you can target areas with high rental demand and strong rental yields. ‘Gross Yields’ are calculated by taking the annual income you receive in rent from a buy-to-let property and dividing it by the purchase price of the property. However, for a more accurate picture of what financial return your rental property will provide you with, you should first subtract your mortgage payments and other applicable expenses from the total annual rental figure before dividing the result by the purchase price of the property.
The North of England can offer particularly good returns for landlords and property investors. Areas such as the Sheffield City Region offer excellent opportunities for buy-to-let property investors thanks to comparatively low property prices, high rental yields and strong potential for capital growth. Working with a local property investment expert can help you improve your returns.
High owner-occupation in many southern regions within the UK forces property prices up and rental yields down. This is not to say that you should not buy in the South of England, but it does show that when searching for buy-to-let properties, the best thing to do is understand what it is you are looking to achieve first, match an area to this, and do not limit yourself to your local area.
Know your target tenant
It’s very important to have a clear idea of the type of tenant you are looking to attract as this will be key in finding the right buy-to-let property.
By way of a basic example, if you want to attract professionals then a noisy student-filled area is not likely to work. If your target tenants are families then local parks and amenities will certainly be attractive to them. If you want to attract students then you need a suitable property in an affordable location, close to the college / university campus, or even an apartment within a purpose-built block. Therefore, it is highly important to consider your tenant before the individual property.
Become an expert on your investment area
Once you’ve decided which type of tenant you would like to cater for, you will be able to narrow down a suitable location. It’s a very good idea to get to know the local area for yourself.
Questions you should be able to answer include:
· What are the nearby schools like?
· What is the distance to the nearest supermarket?
· Are the transport links good?
If you put the work in to finding the right buy-to-let property in the best possible location, you’ll have greater demand from tenants. Further, you’ll attract tenants who want to stay for longer, which means you cut the risk of void periods.
The internet is a great resource for researching locations and the more you know, the more you will have to say when showing tenants around so it’s a good selling point too.
The best way to understand your area is through an area orientation hosted by a local professional investor. Getting a local area orientation is an excellent way to understand your investment area in more detail, very quickly, and you’ll leave with the knowledge you need to invest in the right area to meet your investment aims.
If you have the confidence and the capital then you might want to consider looking at buy-to-let properties that need some refurbishment before they can be let to tenants.
Renovating and updating a rental home can be a great way to reduce stamp duty costs (by paying less for the property) and to add some quick value to your investment, which also gives you a greater margin of financial safety.
Just make sure that the price you pay adequately reflects any work that’s required, and that you can afford for the property to be empty whilst the works are completed.
Team up with a local property investment expert
Getting help throughout your investment journey is easy with the right partner. As a full-service property investment agency, RESONATE PROPERTY helps property investors to understand their investment aims, how to achieve them and importantly, put things into action, through a full suite of investment services geared around your needs. We can help a every step of your property investment journey, from Area Orientation through to Property Sourcing, Refurbishment Project Management and managing rental property.
We can help you create a sustainable income by purchasing rental property, building a property portfolio, or giving you a completely hands-off solution that pays you month by month saving you the time and stress involved in owning property! Get in touch with us now to see how we can help to grow your financial success.
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Before making any large financial decisions, always do research, or talk to a financial adviser. Views are those of our contributors and customers which do not constitute financial advice.